Resale is not just cheaper but now a superior product

[Matty B13]

Do most publicly traded companies play the long game...... no, so why would Disney be any different, much less DVD which is a sales driven department. Most of these restrictions are to give the sales people the buzz words to say how much more you get by being a direct purchaser over a resale owner, if it ever comes up during a sales presentation or call. In my short 3 years as an owner, I think we are on our 2nd or 3rd Executive managing the resorts, so I really don't see any management team looking strategically at the long game here. Probably just trying to get the department to be more profitable than the last executive.

 

[DougEMG]

Do most publicly traded companies play the long game...... no, so why would Disney be any different, much less DVD which is a sales driven department. Most of these restrictions are to give the sales people the buzz words to say how much more you get by being a direct purchaser over a resale owner, if it ever comes up during a sales presentation or call. In my short 3 years as an owner, I think we are on our 2nd or 3rd Executive managing the resorts, so I really don't see any management team looking strategically at the long game here. Probably just trying to get the department to be more profitable than the last executive.

I don't think that they are playing the long game and agree that they are probably looking quarter to quarter, so how are these changes going to help in the next quarter or two?

There are already a number of existing owners who are concerned with all these changes and not going to add on, so a lose of sales.

Most people buy at the parks on vacation, so they don't even know about resale and the effect of these changes. How are these changes going to increase that group buying? What is so wonderful in these changes that a salesperson can talk about to increase the number of sales they make?

They can't destroy the resale market in order to buy cheap contracts, because at some point people will buy because it is cheaper than paying cash, so there is a limit on how low they can drive the resale market. In the last recession prices crashed, probably more than they should have, and even then Disney basically stopped ROFR even though they could have picked up lots of cheap contracts.

So what is their plan and do they even have one.

 

[JoeD07]

I like Bill's analysis -

Increasing the restrictions in hopes of pushing down the cost of resales, then Increasing the price of Direct sales gives a lot of room for profiting from ROFR's.

Wonder if we see more aggressive buybacks over the next few months

 

[Greg36]

I think this certainly makes sense. The thing is though not everyone is going to buy direct, especially at current prices. Some simply would not be able to afford it, others just would not be able to justify it. I guess Disney figures that some people are getting though resale who would buy direct so they want to catch more of those people... I just have a hard time understanding the math on $200+ a point. I mean you are talking 30-40K upfront for enough points to get you a studio for a week in some of these resorts... That to me would cause a lot of people to pause...

 

[ckb_nc]

Disney is squeezing the resale market for sure, slowly. The only real value is Riveria is so over the top as a resort that it drives demand such that it is virtually impossible at 7 months at prime windows to get into the resort. I enjoyed the heck of VGF when we spent a night and will love to go back. But SSR and OKW have their own charm, and the laid back feel is appealing too.

 

[ziravan]

Disney is squeezing the resale market for sure, slowly. The only real value is Riveria is so over the top as a resort that it drives demand such that it is virtually impossible at 7 months at prime windows to get into the resort. I enjoyed the heck of VGF when we spent a night and will love to go back. But SSR and OKW have their own charm, and the laid back feel is appealing too.

As people begin to buy Riviera resale, they’ll be “locked in”, but that also locks an equal number of people out. You can’t “exchange” with an owner who doesn’t have the right to exchange.

Currently, there is significant external 7 month pressure at every resort as other owners gain access to their availability. At Riviera, as resale owners become a significant part of the ownership, that pressure becomes internal. If direct owners want a decent room, they must compete with “locked in” resale owners BEFORE the 7 month window opens:

The functional equivalent is the values and concierge at AKV; standard at BWV/BLT/VGF and soon studios at CCV.

No. The idea that anybody will have a shot at a Tower or Deluxe studio, or 2br, at DRR, at 7 months will be more of a pipe dream than a reality.

 

[Donna M]

No. The idea that anybody will have a shot at a Tower or Deluxe studio, or 2br, at DRR, at 7 months will be more of a pipe dream than a reality.

But that shouldn't happen for a few years. All the initial buyers will be direct and they will be able to trade out.

 

[ScubaCat]

I agree, I have been wondering when Disney will pull the Grandfather plug.

That's tricky because the company as a whole, with all its faults, has maintained a strong reputation for honoring what people bought at the time (BCV jacuzzi tubs notwithstanding...) I'm sure they legally could, but it would certainly be challenged. If most owners sell after some period of time, all they have to do is wait it out anyway. "path of least resistance".

 

[Disn3yVision]

I think it’s easy to say L14 is the way to go when there is only 1 new resort so far and we have no idea what the future holds. But what about in 2030, when the newest hotel is amazing and blows anything we have ever seen out of the water, and you are stuck still paying dues thousands in dues on a contract to visit a hotel built in the 1970’s, 80’s, or 90’s. And as a Poly owner living in Cali, never being able to stay at the next resort they build out here would be awful having to fight for Grand Cal points at 7 months. For years on the boards the advice was buy used.... I’m, personally, am glad I didn’t listen and look forward to visiting many of the new resorts and experiencing the new innovations Disney reveals over next 30 years.

 

[Ben E N]

I think it’s easy to say L14 is the way to go when there is only 1 new resort so far and we have no idea what the future holds. But what about in 2030, when the newest hotel is amazing and blows anything we have ever seen out of the water, and you are stuck still paying dues thousands in dues on a contract to visit a hotel built in the 1970’s, 80’s, or 90’s. And as a Poly owner living in Cali, never being able to stay at the next resort they build out here would be awful having to fight for Grand Cal points at 7 months. For years on the boards the advice was buy used.... I’m sure glad I didn’t listen and look forward to visiting many of the new resorts and experiencing the new innovations Disney reveals over next 30 years.

I know what you mean with that, and most likely agree. The odds of them not adding another MK resort within the next 12 years are very low.
Boy, though, with the early feedback on the looks of Riviera, they have a long ways to go in terms of making the new resorts look more desirable than the old ones. Even Disney fanboys are knocking it pretty bad.

 

[ziravan]

I know what you mean with that, and most likely agree. The odds of them not adding another MK resort within the next 12 years are very low.
Boy, though, with the early feedback on the looks of Riviera, they have a long ways to go in terms of making the new resorts look more desirable than the old ones. Even Disney fanboys are knocking it pretty bad.

It seems like a certainty that resorts 3 and 4 in DVC2 will be a direct access front entrance to Epcot and a Tron/SM entrance to MK with BLT2.

 

[Ben E N]

It seems like a certainty that resorts 3 and 4 in DVC2 will be a direct access front entrance to Epcot and a Tron/SM entrance to MK with BLT2.

I would think BLT2 will just replace the southern garden wing of the Contemporary. Right up against MK is some very valuable real estate, and if it is attached to the Contemporary they can just hop onto their restaurants and transport and not have to include all of that in the new resort.

 

[RaymOOOnd]

This move is DVD's plan to kill resale. They raised direct prices, will ROFR L14 resorts and sell the without restrictions. With the prices raised, they will make profit on each ROFR sale.

Bill

This is slightly depressing for someone still hoping to pick up a resale VGF contract within a year or so. I'm guessing nothing stops them from beginning to ROFR virtually every attempt. I've wondered already what keeps them from doing so, i.e. why they ever let any transactions go through, when they have a long waiting list of people wanting to buy direct.

 

[Bearval]

This is slightly depressing for someone still hoping to pick up a resale VGF contract within a year or so. I'm guessing nothing stops them from beginning to ROFR virtually every attempt. I've wondered already what keeps them from doing so, i.e. why they ever let any transactions go through, when they have a long waiting list of people wanting to buy direct.

I think they only the ROFR contracts that will allow them to meet what their target profit margin is and where they already have buyers for. As an example, if the targeted profit margin for a "new" direct sale is 40% then if the resort costs $150.00 per point to build, $20.00 per point to advertise/market and $30.00 per point to market ( sale commission/closing/lawyer fees etc.)they would then sell the new points for $280.00 each. I have no idea what it costs DVD for all of this items.

For a existing resort if they have to ROFR they have the buy back costs say $110.00 per point, then add sales commission/closing/lawyer fees etc. say $20.00 per point for a lower resale price. Then it has to meet the targeted profit margin of 40% which would require them to sell at $182.00. If it does not meet the profit margin goal that was set they then just pass on the ROFR. What I feel DVD is doing with the restrictions for newer resorts that they are going to be selling is to push more of the resales to a price point where they can exercise their ROFR and make what the profit margin goal for the sales.

 

[DaveNan]

I think they only the ROFR contracts that will allow them to meet what their target profit margin is and where they already have buyers for. As an example, if the targeted profit margin for a "new" direct sale is 40% then if the resort costs $150.00 per point to build, $20.00 per point to advertise/market and $30.00 per point to market ( sale commission/closing/lawyer fees etc.)they would then sell the new points for $280.00 each. I have no idea what it costs DVD for all of this items.

For a existing resort if they have to ROFR they have the buy back costs say $110.00 per point, then add sales commission/closing/lawyer fees etc. say $20.00 per point for a lower resale price. Then it has to meet the targeted profit margin of 40% which would require them to sell at $182.00. If it does not meet the profit margin goal that was set they then just pass on the ROFR. What I feel DVD is doing with the restrictions for newer resorts that they are going to be selling is to push more of the resales to a price point where they can exercise their ROFR and make what the profit margin goal for the sales.

They may also have the "cost" of points to make the contract "whole" for resale. They include current calendar year points on resale. If DVD has those points available, they can either add them to a resale contract, or use them to pull inventory and make cash reservations. This may impact the "cost" of the contract. The opportunity cost of available points they have. If only there was a way for DVD to make more points available to them.....

 

[Bearval]

They may also have the "cost" of points to make the contract "whole" for resale. They include current calendar year points on resale. If DVD has those points available, they can either add them to a resale contract, or use them to pull inventory and make cash reservations. This may impact the "cost" of the contract. The opportunity cost of available points they have. If only there was a way for DVD to make more points available to them.....

LOL............. Yes you are correct about additional costs that may be involved but in any case it is purely a business decision on when they buy back contracts.

 

[Jerry@dvcstore]

Yes, I work for The Timeshare Store,Inc.® so you would expect me to say this....but Disney just made the first 14 resorts a superior resale product.

This change may really hurt the new buyer who doesn't know resales exist. They will buy at Riviera and down the road when they have to resell....they lose. It is hard to know what the resale values will be for Riviera, but I'm guessing it will be lower than the first 14 resorts due to the lack of exchangeability.

Disney may scoop up the Riviera resales under ROFR, but when they resell them direct, it may cannibalize their direct sales and ability to focus on building new resorts. If they keep buying back everything they will have to much inventory to resell.

The resale market has allowed Disney to not to cannibalize. On average, they buy back around 10% of what's resold. So currently the ROFR keeps the secondary market in check (price wise) and "fills buyers on waitlists" with Disney direct. The resale market has also given Disney the ability to focus on building new resorts. It has kept rooms full, annual dues paid, and buyer and sellers happy that their "investment" into DVC wasn't a total waste of money.

The Riviera is a new chapter in the DVC book and will be interesting to see if this new Restriction backfires on Disney. I was excited at first to hear of the new resorts but once they restricted anyone who buys then resells it, it seemed like a mis-step for them.

The first 14 DVC resorts should always resell well....But will the masses purchase a property (Riviera) that may not resell? Tuff question. I guess once Riviera opens and we see how Guests and Members enjoy the property, is when we will start to know more.

.

 

[Matty B13]

The gondolas are going to have to be a grand slam, in order for Riviera to be a success, if they aren't I think we will see a lot of discounted points being sold, especially if they economy starts to cool off.

 

[Jack_Sparrow_NJ]

I think now that the direct prices have increased Disney will begin exercising their ROFR on a higher percentage of resale’s. This will drive up the resale prices. The goal being to drive up resale prices so there is a smaller delta versus buying direct. They profit from reselling the original 14 while effectively moving new buyers away from the resale market.

 

[Bearval]

Yes, I work for The Timeshare Store,Inc.® so you would expect me to say this....but Disney just made the first 14 resorts a superior resale product.

This change may really hurt the new buyer who doesn't know resales exist. They will buy at Riviera and down the road when they have to resell....they lose. It is hard to know what the resale values will be for Riviera, but I'm guessing it will be lower than the first 14 resorts due to the lack of exchangeability.

Disney may scoop up the Riviera resales under ROFR, but when they resell them direct, it may cannibalize their direct sales and ability to focus on building new resorts. If they keep buying back everything they will have to much inventory to resell..
The resale market has allowed Disney to not have to cannibalize. On average, they buy back around 10% of what's resold. So currently the ROFR keeps the secondary market in check (price wise) and "fills buyers on waitlists" with Disney direct. The resale market has also given Disney the ability to focus on building new resorts. It has kept rooms full, annual dues paid, and buyer and sellers happy that their "investment" in to DVC wasn't a total waste of money.

The Riviera is a new chapter in the DVC book and will be interesting to see this new Restriction backfires on Disney. I was excited at first to hear of the new resorts but once they restricted anyone who buys then resells it, it seemed like a mis-step for them.

The first 14 DVC resorts should always resell well....But will the masses purchase a property (Riviera) that may not resell? Tuff question. I guess once Riviera opens and we see how Guests and Members enjoy the property is when we will start to know more.